Posthaste: The day after Trump's tariffs, 'everyone’s sinking, but the U.S. is going under first'

Canada and Mexico might have got off (relatively) easy on Donald Trump’s Liberation Day, but for the rest of the world the tariff blow was far worse than expected — and market reaction suggests the biggest loser could be the United States.

The U.S. yesterday announced it will impose a 10 per cent tariff on all countries, with some facing even higher rates, including 34 per cent for China and 20 per cent for Europe.

This pushes the U.S. effective tariff rate to more than 20 per cent — the highest level since the 1940s, said Toronto-Dominion Bank economists.

While Trump said trading partners could negotiate to lower those rates, analysts expect rising trade tensions and the initial shock of the announcement will lead to some retaliation.

“In the next hours and day, the world’s reaction, likely retaliation and how much effort and money countries will deploy to fight the U.S. back will matter,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“For now, everyone’s sinking, but the U.S. is going under first.”

U.S. stocks took the brunt of the selloff after the announcement. Futures dropped more than 4 per cent, compared with a 1.7 per cent decline in Asian stocks. European futures fell 2.4 per cent before paring losses.

The U.S. dollar fell against all G-10 currencies, dropping to its weakest level against the Canadian dollar since mid-December.

Analysts say there is growing anxiety that Trump’s upheaval of global trade threatens not only the U.S. economy, but the world’s as well.

“It’s definitely more aggressive than what people were expecting,” Brad Bechtel, head of foreign exchange at Jefferies Financial Group Inc. in New York, told Bloomberg. “It’s a bigger doom loop for the rest of the world.”

Canada remains